A person invests Rs 500 at the end of each year with a bank which pays interest at 10% pa ci annually. The amount standing to his credit one year after he has made his yearly investment for the 12th Time is?

Question

Answer

Calculation of Amount Standing to Credit

Principal amount (P) = Rs 500

Interest rate (R) = 10% pa

Compounding frequency (n) = 1 (compounded annually)

Number of years (t) = 12

Calculation of Interest Earned for Each Year

Interest earned for the first year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*1) - 500 = Rs 50

Interest earned for the second year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*2) - 500 = Rs 105

Interest earned for the third year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*3) - 500 = Rs 161.5

Interest earned for the fourth year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*4) - 500 = Rs 220.65

Interest earned for the fifth year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*5) - 500 = Rs 283.72

Interest earned for the sixth year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*6) - 500 = Rs 351.09

Interest earned for the seventh year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*7) - 500 = Rs 423.20

Interest earned for the eighth year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*8) - 500 = Rs 500.52

Interest earned for the ninth year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*9) - 500 = Rs 583.59

Interest earned for the tenth year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/1)^(1*10) - 500 = Rs 672.95

Interest earned for the eleventh year = P x (1 + R/n)^(n*t) - P = 500 x (1 + 0.10/

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